[12114]
June 27, 2000
TO: BOARD OF GOVERNORS No. 35-00
FEDERAL LEGISLATION MEMBERS No. 8-00
PRIMARY CONTACTS - MEMBER COMPLEX No. 43-00
PUBLIC INFORMATION COMMITTEE No. 24-00
RE: MUTUAL FUND SHAREHOLDERS TAX RELIEF LEGISLATION INTRODUCED
IN HOUSE
On June 22, the vice chairman of the Joint Economic Committee introduced a bill to limit mutual
fund shareholders’ current tax liability for capital gains distributed by a fund. Shareholders would remain
fully responsible for capital gains tax when they sell their mutual fund shares.
H.R. 4723, introduced in the House by Rep. Jim Saxton (R-NJ), would allow a mutual fund
shareholder to exclude up to $3,000 of mutual fund capital gain distributions from current taxation, as
long as the amounts are automatically reinvested in the funds ($6,000 for joint returns). Thus, the bill
clarifies that a shareholder’s cost basis would not increase by the reinvested amount that was shielded
from current taxation. In a press release, Vice Chairman Saxton said that the legislation “is designed to
begin a debate over the current tax treatment of capital gains distributions.”
We will keep you informed of further developments with this legislation.
Matthew P. Fink
President
Attachment
Attachment (in .pdf format)